Friday, November 10, 2006

Global Forces

Per Michael Mandel with BusinessWeek:

Sometime next year—perhaps around Christmas 2007, if current trends continue—the U.S. will hit a milestone. For the first time in recent memory, the cost of imported goods and services will exceed federal revenues. In other words, Americans will soon pay more to foreigners than they do to their national government.

We're almost there now. Imports cost us about $2.2 trillion a year; the federal government collects $2.4 trillion in revenues. Why is that important? Because for the past 70 years, Washington has been the 800-pound gorilla, more powerful by far than any other force in the U.S. economy. That's not true anymore. The federal government remains plenty influential, but the global economy is more so.

This will come as a rude shock to Representative Nancy Pelosi (D-Calif.), the presumptive Speaker of the House, Charles B. Rangel (D-N.Y.), the likely chairman of the House Ways & Means Committee, and other newly enfranchised leaders in the Democratic Party. Sure, they're likely to have the power to pass legislation, including boosting the minimum wage. But such a measure, even if President George W. Bush signed it, would help only a small fraction of the workforce. It would do almost nothing to ameliorate the weak wage growth that has plagued most Americans, including college graduates, in recent years. The broad-based drop in incomes is being driven more by the rise of China and India and the intensification of global competition. And there is little Democrats can do to reverse these trends.

I am as big a fan of free trade as anyone, yet it does frighten me the way those guys in Bangalore, India, and China are eating into the U.S. Economy. My take on it, is that it will force Americans to get off their fats and start learning. While our labor costs cannot compete with India, we can at least make a push at educating ourselves to the degree of those phenomenal Indian technical institutes.

When it comes down to it, Americans lack drive. The Indians are hungry, and will do what it takes to work there way into a decent lifestyle, while Americans, in general, are fat, lazy, and complacent to watch Grey's Anatomy and Lost every night. My message is this: Wake up everyone, or we will all find ourselves being eaten for lunch by the rest of the hungry world.